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If Inflation Was To Be Their Plan... who would buy UK GILTS again in the future?

#1 User is offline   inflating 

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Posted 21 June 2011 - 06:45 PM

Paul Fisher at the Bank of England hints at more money printing to keep deflation at bay (by deflation, he must be talking about property in some areas or referring to large screen televisions, as I can't think of much else that's going down in price across the UK)

If the plan of the BoE were to inflate away HM Government's debt, who would want to buy debt from the DMO in the future having seen what the BoE did this time?

AFAIK only a minority of HMG debt is not index-linked, this means they can only inflate some (that minority) of the debt away. Am I mistaken, is it vice versa? Or will they inflate and fiddle the indexes?

Or is simply that with QE, it matters not a jot what the Gilt markets think, because basically HMG is buying its own debt via the BoE anyway with a middle-man to keep it legal?

Finally, do you get a Knighthood these days if you pretty much halve the value of Sterling over 10 years and preside over a disastrous bubble while doing little more than stuffing your gormless face with chocolate digestives and claiming for a railcard on expenses?

This post has been edited by inflating: 21 June 2011 - 06:47 PM


#2 User is offline   exiges 

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Posted 21 June 2011 - 06:48 PM

View Postinflating, on 21 June 2011 - 06:45 PM, said:


If the plan of the BoE were to inflate away the HM Government's debt, who would want to buy debt from the DMO in the future having seen what the BoE did this time?


UK banks. Paid for by you and me with savings rates at 0.5% and credit card rates at 20%. Neat huh ?
Constant growth the cancerous cure, a swarming race of profiteers ensure cheap cars for the rich, cheap lives for the poor, cheap weeks in the sun, free drinks at the door. Puerile propaganda plugs up the TV, keep folk following the money so they'll never be free.

Bankrupt schools grind out fool after fool then feed them to a system where idiots rule. Polling booths, phone votes, bogus questionnaires, you get a say as if anybody cares. Joe Public doesn't want to play so liquidate his life as he looks the other way.

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#3 User is offline   Laughing Gnome 

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Posted 21 June 2011 - 06:50 PM

View Postinflating, on 21 June 2011 - 06:45 PM, said:

Paul Fisher at the Bank of England hints at more money printing to keep deflation at bay (by deflation, he must be talking about property in some areas or referring to large screen televisions, as I can't think of much else that's going down in price across the UK)

If the plan of the BoE were to inflate away HM Government's debt, who would want to buy debt from the DMO in the future having seen what the BoE did this time?

AFAIK only a minority of HMG debt is not index-linked, this means they can only inflate some (that minority) of the debt away. Am I mistaken, is it vice versa? Or will they inflate and fiddle the indexes?

Or is simply that with QE, it matters not a jot what the Gilt markets think, because basically HMG is buying its own debt via the BoE anyway with a middle-man to keep it legal?Finally, do you get a Knighthood these days if you pretty much halve the value of Sterling over 10 years and preside over a disastrous bubble while doing little more than stuffing your gormless face with chocolate digestives and claiming for a railcard on expenses?

That I think, but now that QE is done I was hoping the fabled bond vigilantes would be riding for vengeance.

Everything just keeps ticking along, it's very tiresome.

#4 User is offline   inflating 

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Posted 21 June 2011 - 06:53 PM

View Postexiges, on 21 June 2011 - 06:48 PM, said:

UK banks. Paid for by you and me with savings rates at 0.5% and credit card rates at 20%. Neat huh ?


This is the obligatory purchase of HMG debt I presume. Neat, like an episode of The Real Hustle

#5 User is offline   Wait & See 

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Posted 21 June 2011 - 07:01 PM

The BOE must be the most useless (independent..... :lol:) government body ever created.
It is actually shocking watching Merv try and justify their actions of keeping the base rate at 0.5%, meanwhile every person in the country is seeing their income fall down a hole.

Pathetic. But it looks like they're about to make the situation even worse with more frigging printy, printy. :blink:
Like I said on the other thread....Oh dear!! This isn't going to end well. :rolleyes:

#6 User is offline   cashinmattress 

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Posted 21 June 2011 - 07:12 PM

View PostWait & See, on 21 June 2011 - 07:01 PM, said:

The BOE must be the most useless government body ever created.


It is not, and never will be a 'government' body.

It is perhaps better to say that the BOE is the most corrupt and efficient organisation ever created.

Bringing you inflation since 1694.

#7 User is offline   Wait & See 

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Posted 21 June 2011 - 07:18 PM

View Postcashinmattress, on 21 June 2011 - 07:12 PM, said:

It is not, and never will be a 'government' body.

It is perhaps better to say that the BOE is the most corrupt and efficient organisation ever created.

Bringing you inflation since 1694.



lol, my point though was that they might as well be a government body, because Merv gets his orders from the PM and then has to talk bullsh!t in order to pull the wool over the publics eyes.

It really is getting pathetic now, as there can be no justification for keeping rates at 0.5%. None imo. :rolleyes:

This post has been edited by Wait & See: 21 June 2011 - 07:19 PM


#8 User is offline   cashinmattress 

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Posted 21 June 2011 - 07:24 PM

View PostWait & See, on 21 June 2011 - 07:18 PM, said:

lol, my point though was that they might as well be a government body, because Merv gets his orders from the PM and then has to talk bullsh!t in order to pull the wool over the publics eyes.

It really is getting pathetic now, as there can be no justification for keeping rates at 0.5%. None imo. :rolleyes:


Oh yes there is.

The ONLY two tools available to a central banker are:

1- Credit

2- Interest on credit

Hence why we have 'economic cycles' or whatever naive term you want to label these controls. No matter what you do now you will lose. No deposit interest, massive loan interest, restricted credit.

At the end of this you will see, as we are seeing in smaller scale now, is wholesale purchasing of commodities and property, by bankers, for pennies on the pound.

Is that clear enough for you>

#9 User is offline   Wait & See 

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Posted 21 June 2011 - 07:34 PM

View Postcashinmattress, on 21 June 2011 - 07:24 PM, said:

Oh yes there is.

The ONLY two tools available to a central banker are:

1- Credit

2- Interest on credit

Hence why we have 'economic cycles' or whatever naive term you want to label these controls. No matter what you do now you will lose. No deposit interest, massive loan interest, restricted credit.

At the end of this you will see, as we are seeing in smaller scale now, is wholesale purchasing of commodities and property, by bankers, for pennies on the pound.

Is that clear enough for you>



Yep, it's rolling snake eyes for us all then.
All I'm interested in is not paying for the diddy mortgage holder but it looks like Merv has other ideas. The old b4st4rd that he is. :blink:

#10 User is offline   leicestersq 

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Posted 21 June 2011 - 07:46 PM

View Postcashinmattress, on 21 June 2011 - 07:24 PM, said:

Oh yes there is.

The ONLY two tools available to a central banker are:

1- Credit

2- Interest on credit

Hence why we have 'economic cycles' or whatever naive term you want to label these controls. No matter what you do now you will lose. No deposit interest, massive loan interest, restricted credit.

At the end of this you will see, as we are seeing in smaller scale now, is wholesale purchasing of commodities and property, by bankers, for pennies on the pound.

Is that clear enough for you>



With only two levers to pull, I trust they don't cost us much.

#11 User is offline   Timm 

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Posted 21 June 2011 - 07:55 PM

View Postinflating, on 21 June 2011 - 06:45 PM, said:

Paul Fisher at the Bank of England hints at more money printing to keep deflation at bay (by deflation, he must be talking about property in some areas or referring to large screen televisions, as I can't think of much else that's going down in price across the UK)

He's talking about asset prices. I suppose this includes houses, but more importantly, it relates to keeping gilt prices high, which is the same as saying keep interest rates down.


Quote

If the plan of the BoE were to inflate away HM Government's debt, who would want to buy debt from the DMO in the future having seen what the BoE did this time?

Somebody who wants to get most of their money back?


Quote

AFAIK only a minority of HMG debt is not index-linked, this means they can only inflate some (that minority) of the debt away. Am I mistaken, is it vice versa? Or will they inflate and fiddle the indexes?

I'm pretty sure it's the other way round, but it doesn't really matter. QE is not designed to cause (a huge amount of) inflation, it is designed to allow it. (And protect previous inflation, but I'll leave that one to Injin).

They are not trying to inflate, they are trying to survive, and reset the ponzi:

Which allows the broad money supply to inflate later.


Quote

Or is simply that with QE, it matters not a jot what the Gilt markets think, because basically HMG is buying its own debt via the BoE anyway with a middle-man to keep it legal?

Pretty much. Don't forget the middle men are being paid rather well.


Quote

Finally, do you get a Knighthood these days if you pretty much halve the value of Sterling over 10 years and preside over a disastrous bubble while doing little more than stuffing your gormless face with chocolate digestives and claiming for a railcard on expenses?

IMWO, you get a knighthood if you come out the other end of this with your head on your shoulders and a functioning fiat money system.
Less credit - more money.

And I beheld a black horse; and he that sat on him had a pair of balances in his hand. And I heard a voice in the midst of the four beasts say, A measure of wheat for a days wages, and three measures of barley for a days wages; and see thou hurt not the oil and the wine.

#12 User is offline   inflating 

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Posted 21 June 2011 - 07:57 PM

View PostWait & See, on 21 June 2011 - 07:34 PM, said:

The old rotten, slimey knighted b4st4rd that he is.


+1

(corrected for you)

#13 User is offline   inflating 

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Posted 21 June 2011 - 08:01 PM

Timm, thanks, but unless I'm reading this wrong, no more than 30% are index linked

http://www.dmo.gov.u...T%20MARKET%20(3)&reportpage=Portfolio_Composition

#14 User is offline   Timm 

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Posted 21 June 2011 - 08:09 PM

View Postinflating, on 21 June 2011 - 08:01 PM, said:

Timm, thanks, but unless I'm reading this wrong, no more than 30% are index linked

http://www.dmo.gov.u...T%20MARKET%20(3)&reportpage=Portfolio_Composition

I can't get much from your link, but I'd be surprised if more than 30% were linkers.

So we seem to agree.

Perhaps I misread your previous post, or perhaps you miswrote it?
Less credit - more money.

And I beheld a black horse; and he that sat on him had a pair of balances in his hand. And I heard a voice in the midst of the four beasts say, A measure of wheat for a days wages, and three measures of barley for a days wages; and see thou hurt not the oil and the wine.

#15 User is offline   inflating 

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Posted 21 June 2011 - 08:16 PM

View PostTimm, on 21 June 2011 - 08:09 PM, said:

I can't get much from your link, but I'd be surprised if more than 30% were linkers.

So we seem to agree.

Perhaps I misread your previous post, or perhaps you miswrote it?


My point in that post was that a minority of gilts are index-linked to inflation. Therefore the UK govt can, in theory, inflate their debts away on the majority of their debt.

I had asked who would want to touch UK debt in future if that were the case, but seems they may have a cosy arrangement with the UK banks they own to buy their debt, which is basically the govt buying their own debt, which is what Zim did, am I correct?

You seem all in favour of QE, I'm not, and I consider the UK economy under the stewardship of the BoE to be highly questionable for some years now, with no sign of that improving

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